The employee's taxes do, in fact, include the employer's contribution. The way to look at it is that the employer is paying a given sum of money for a given sum of work from the employee. If that is mandated to be broken into wages, taxes and benefits or whether it is all given as a lump sum makes no difference to the employer. Their cost for the work is the same.
During the last three years, we have had to lay people off and have eliminated employer provided insurance. We have two of our people who have come back on a contract basis. Since that makes them responsible for all the taxes, we are having to pay them a higher rate (but lower total employee cost since we do not pay for benefits) than we did when they were employees for them to get the same net pay.
Well, you can look at it however you wish. I worked in the controller’s department for a large publicly traded corporation.
My paycheck never showed any 15% deduction for payroll taxes. The corporation had the liability to pay. If they didn’t pay, they would be in violation of the law-not me.
Payroll tax is just another type of business expense that rolls into the cost of goods sold. It is necessary to price the products to cover all costs plus a margin.
It still does not change the fact that the employer is paying the expenses out of the business account, and the employee is not paying that particular expense out of their personal checking account, nor is it deducted from their payroll check.
Plus, that’s not the way it is looked at here with sole proprietors nor do the employees here typically look at it that way. They both look at it as the Employer paying a matching amount to the government.
Nor do contracted employees here, typically get more pay to make up for it.
It makes sense to combine all employees expenses in an operating budget for the purpose of pricing and operational trends/costs.
It does not make sense to look at it that way for the purpose of a taxation discussion, for the reasons explained above. The corporation carries the liability, not the employee.